Enterprise information systems - Aalto · Enterprise Information Systems for E-Business ... An large-scale information system that supports the ... SAP alone is used by more than

SoberITSoftware Business and Engineering Institute

HELSINKI UNIVERSITY OF TECHNOLOGY

Enterprise Information Systems for E-Business

Timo Soininen

T-86.300 Lecture1.11.2004

09/11/2004



Enterprise Information System, My Definition

An large-scale information system that supports the

operations and processes of an organization

Operations: manufacturing, financial accounting…

Organization: company, university, bank, ministry, …

Not a single-user, single-task-focused application

(Contrast with Alter, 2002)

Q: What enterprise systems do you encounter in your

daily life?

09/11/2004



Motivation

These are the systems on top of which (e-) business is

implemented

There are ”standard” packages that can be used for this

old, stable ones and new, rising ones

That’s what remains, even after all the hype has crashed

SAP alone is used by more than 60% of the major

firms

However, implementing or taking such a systems into use

is challenging

09/11/2004



Contents

Motivation, challenges

Categories of information systems based on the functions

of a company

Enterprise Systems/Enterprise Resource Planning

Product Design Systems/Product Data Management

Enterprise System Integration

Summary

09/11/2004



Why is it Challenging?

The systems are huge

implementation several years, costs 105 to 106 euros, dozens of people with different backgrounds representing different departments involved

They support the critical operations of a company

Hershey, others,...

The following based on (Sumner, 2000)

case studies of Enterprise Resource Planning-system projects in seven large companies

discuss those that seem the most pertinent or controversial for enterprise systems

09/11/2004



(Some) Risk Factors in ERP Projects

Organizationno re-design of business processes +/-no enterprise-wide design for integration (process, db,...) +

Skill mixinsufficient user training, internal expertise +/-lack of business analysts +failure to mix internal and external expertise +/-difficulty to recruit and retain experts in ERP +

Management structureno senior management support +no champion +

Software systems designfailure to adhere to standards +/-lack of integration +

User involvementno commitment by customers +/-user resistance +ineffective communication

Technology planning/integration +

09/11/2004



Information System Categories

Based on a functional decomposition of the company

(Alter, 2002)

Sales & Marketing Systems

Supply chain systems

Manufacturing systems

Finance systems

Product design systems

There are also other, important and new systems, also

probably both important and new ones

09/11/2004



Sales & Marketing Systems

PointPoint--ofof--sale (POS) systemssale (POS) systems –

Combined with customization techniques, can be used

in direct marketing

E-commerce platforms

Telemarketing Telemarketing

Sales force automation (SFA)Sales force automation (SFA)

Customer relationship management (CRM)Customer relationship management (CRM)

Product ConfiguratorsProduct Configurators

09/11/2004



Supply Chain Systems

Manage information about

what inventory is available, when previously ordered material

will arrive, and when material will probably be needed based on

manufacturing schedules or sales forecasts

Determine material requirements

Generate new orders

Send orders to suppliers

Obtain commitment dates

Verify that the orders actually arrived

09/11/2004



Supply chain management

09/11/2004



Material requirement planning (MRP)Material requirement planning (MRP)

Integrate purchasing & production activities

Calculate a schedule based on the output requirement

Electronic data interchange (EDI)Electronic data interchange (EDI)

The electronic transfer of business data between the

computerized information systems of two firms

09/11/2004



Supply chain management (SCM)Supply chain management (SCM)

System that allows close coordination with

suppliers

EDI and SCM are part of the general trend

toward integration between suppliers and

their customers

09/11/2004



Manufacturing Systems

Computer integrated manufacturing (CIM)Computer integrated manufacturing (CIM)

Computerized data collection + integrated

data flows between design, manufacturing,

planning, and other business functions

The use of CAD, CIM, and other techniques lead

to an increase in the information content

of products

09/11/2004



09/11/2004



Finance Systems

Electronic funds transfer (EFT)

Accounts between companies settled

electronically

Electronic cash

Program trading

Automate buy/sell decisions

09/11/2004



Product Design Systems

CAD systems – accept coded descriptions of

components and processes and graphically

display the resulting product specifications

A major systems in this are is the Product Data

Management System (PDM)

Wide range of applications



Enterprise Systems

09/11/2004



Enterprise Systems

Enterprise systems = firm-wide systems that serve as a

common information infrastructure for basic business

processes

Enterprise resource planning (ERPEnterprise resource planning (ERP) systems

Controversial

Expensive and very difficult to implement

Business processes may have to be modified to fit the

software, instead of the other way around

09/11/2004



Enterprise Resource Planning (ERP)

Enterprise resource planning (ERP)

ERP is an integrated solution to the problem of how to control all major business processes with a single software architecture in real time. It is a process of planning and managing all resources and their use in the entire organization.

Leading ERP software producers

- SAP, Oracle, J.D. Edwards, Computer Associates, People Soft

Main Objective of ERP

to integrate all departments & functions across a company onto a single computer system.

09/11/2004



MS

ERPOrder

processingProduct design and engineering

Production planning

Production control

Materials acquisition

Management Administration, financing, etc.

SuppliersProductionCustomers

Marketing and sales

Owners, financing inst., public bodies,

society

09/11/2004



ERP (Alter, 2002)

Enterprise resource planning (ERP) systems provide an integrated information system that covers broad functions withinan enterprise. The capabilities of a complete ERP system include, among others:

Operations and logistics: inventory management, MRP, production planning, quality management, shipping.

Financials: accounts receivable and payable, cash management, general ledger, profitability analysis.

Sales and marketing: order management, sales management, pricing, sales planning.

Human resources: employee time accounting, payroll, travel expenses.

09/11/2004



mySAP ERP functionality (modules)

R/3R/3Client / ServerClient / Server

ABAP/4ABAP/4

FIFIFinancialFinancial

AccountingAccounting

COCOControllingControlling

TRTRTreasuryTreasury

PSPSProjectProjectSystemSystem

WFWFWorkflowWorkflow

ISISIndustryIndustry

SolutionsSolutions

MMMMMaterialsMaterials

Mgmt.Mgmt.

HRHRHumanHuman

ResourcesResources

SDSDSales &Sales &

DistributionDistribution

PPPPProductionProductionPlanningPlanning

QMQMQualityQuality

ManageManage--mentment PMPM

Plant MainPlant Main--tenancetenance

IMIMInvestmentInvestment

MgmtMgmt

Finance

Logistics

09/11/2004



SD

Basic dataBasic data• Customers

• Vendors

• Material

• Bill of material, CAD

• Work plan, plant maintenance plan, inspection plan, CAP

• Work center

• Production resources and tools

• Rough-cut planning profile

• Equipment

• Document

• ClassificationShipping, billing, transport

Inspection lotInspection order

SDCustomer orderprocessingCustomer requirements

PPQM

Order:- Creation- Release- Confirmation

Shop floor control Capacity levelingCAP

RepairMaintenance

PM

MM

Inventory managementGoods receiptMaterial valuationInvoice verification

Warehouse management

PlannedordersOpeningperiod

Demand managementMaterials planning

Rough-cut capacityplanning

Direct requisition

NetworkNetworkProjectsProjects

Project systemProject systemProfit planningSOPPlanned requirementsForecasts

Sales planning

Purchasing

(C) Deloitte

09/11/2004



The Evolution of Integrated Systems

09/11/2004



09/11/2004



Business Benefits

Benefit Number of Firms Percent

Personnel Reductions 44 20%

Inventory Reductions 42 19

IT Cost Reduction 27 13

Productivity Improvements 23 11

Order Management Cycle Time 19 9

Cash Management 16 7

Revenue/Profit 15 7

Procurement 12 6

Financial Cycle Close 10 5

Maintenance 8 4



Product Data Management Systems

09/11/2004



Enter CAD From drawings to 2D and 3D models, i.e. files

easy to change, explosion of number of versions

Hardcopies archived and treated as before as the primary

source

but since changing is so easy, who has time to update

the hard copy?

In practice, use the latest copy of the file in your

workstation

the disciplined processes deteriorate

where is the correct copy? Who has the latest copy?

09/11/2004



Changing business environment

Increased competition

Global markets, aggressive market behavior

Shrinking budgets, lower production costs

Products are becoming more complex, exploiting more

technologies and built in vast number of variants

Quality requirements and customer responsiveness are increasing

Global manufacturing (expanded teaming)

Government and industry standards

Increased automation capabilities

09/11/2004



R&D Challenge: Concurrent Engineering

Concurrent engineering

provides

Faster product

development with less

cost

Shorter time to market,

early feedback of design

implications

Concurrent engineering requires

Rapid and effective cross-team

communication even when teams

and product data are

geographically spread

Integration of heterogeneous

design environments (software &

hardware)

Supplier and customer participation

Fast decision making based on hard

product data

09/11/2004



Definitions of PDM

Crnkovic, Asklund, Persson Dahlqvist

(2003):

PDM is the discipline of controlling the

evolution of a product and providing other

procedures and tools with the accurate

product information at the right time in the

right format during the entire PLC

09/11/2004



Definition: PDM (CIMdata)

Manages all product type (definition), individual and process related information

Images and hard-copy documents

Digital files

Electronic documents: specifications, configurations, purchasing orders

CAD Drawings, models, parts, assemblies

CAE analysis

Part information, NC programs, and process plans

Database records

Manages the entire product life-time

Product design, release, change and termination

Product engineering, manufacturing, logistics, maintenance, dismantling, recycling

09/11/2004



PDM: a Broad and Narrow Definition

The broad definition PDM exemplified by the previous ones

The narrow definition of PDM

management of engineering data in the product

development department

providing access to that data to and repository of some

data from systems of other departments

09/11/2004



R&D: Concurrent Engineering

PDM facilitates

Up to date product document data: always work with right version

Real time and complete product structure management

Improved use of standard parts

Quick and easy access to product data

Real-time tracking and status for management: workflow

management

Early evaluation of manufacturing processes

Many more ...

09/11/2004



PDM

Order processing

Product design and engineering

Production planning

Production control

Materials acquisition

Management Administration, financing, etc.


Marketing and sales

Owners, financing inst., public bodies,

society

09/11/2004



PDM Benefits, exampleExperience of a communication satellite programMetric Standard C.E. Delta (%)

Design Hours 5337 5929 4460 16%/25%

Span Time (months) 21 19 11 48%/42%

Tooling Costs $79,461 $49,993 $42,057 47%/16%

No. Changes (15 mo.) 16 24 6 63%/75%

No. Changes (30 mo.) 22 28 6 73%/79%

No. Quality Reports 23 37 4 83%/89%

No. Waivers 36 40 2 94%/95%Mark Knodle, General DynamicsSpace Systems Division

09/11/2004



PDM Functions Major focus ofcurrent

developmentsGenerally supported

Some support, independents

establishing market

As PDM becomes implemented across

different industry sectors, functional priorities change.

Littlesupport

ProgramManagement

Product StructureManagement

Classification& Retrieval

partno Length

Screw

axy1234 10 mm

zvy3245 20 mm

dgf2345 30 mm

Workflow and ProcessManagement

ECOECO

Data Vault and DocumentManagement

Drawings/Documents

NC

3D

SPEC

+ Support utilities

25/11/2003 Copyright © 2001 Timo Soininen & Asko Martio 25

PDM Functions Major focus ofcurrent

developmentsGenerally supported

Some support, independents

establishing market

As PDM becomes implemented across

different industry sectors, functional priorities change.

Littlesupport

ProgramManagement

Product StructureManagement

Classification& Retrieval

partno Length

Screw

axy1234 10 mm

zvy3245 20 mm

dgf2345 30 mm

Workflow and ProcessManagement

ECOECO

Data Vault and DocumentManagement

Drawings/Documents

NC

3D

SPEC

+ Support utilities

09/11/2004



Data vault

PDM Server

Meta-Database

data

Managed referenced files

Object: DocumentDate: 1/1/95Project: MotorPart #: 8893-0ARevision: 2.3ADocument #: 4569-29File: A:\PDM\doc\motor\...Application: MS-Word 6.0

09/11/2004



1 Quality2 Attributes3 Materials4 Process

1 Quality2 Attributes3 Materials4 Process

Assembly drawing and BOM

Test Data

Analysis Report

Marketing Definition

Phone Receiver

Revision A

Revision B

Revision A

Revision B

Revision A

Revision B

Revision A

Revision ARevision A

Revision A

Revision A

Revisions

09/11/2004



ECOECO

DesignEngineeringSupervisor

Purchasing

Manufacturing

Customer Service

Project Management

ECO

ECO

ECO

ECO

FYI

ECO approval process, example

09/11/2004



Islands of automation: past development in companies

Unstructured and random:

a quick fix applied to a local problem

Local ”standard” systems start to appear, e.g.:

production, finance since 1960’s

design since 1980’s

Improvements targeted at one bottleneck at a time, unaware of possible new problems created

Orderprocessing

Product designand engineering

Productionplanning

Productioncontrol

Materialsacquisition

Management Administration,financing, etc.


Marketing andsales

Owners,financing inst.,public bodies,

society



Enterprise Systems Integration

09/11/2004



Islands of automation: result of the development

CAD

CAMProductionmanagement

Order entry

Materialsmanagement

Shipping

Separate systems which

cannot exchange information

Large amount of manual

work is required to prepare

input for the various systems

and to process the outputs,

leading to errors.

Q: What islands of

automation do you

encounter?

09/11/2004



Islands of automation: need for a strategy

Integration strategy for bridging the “islands”

CAD

CAMProductionmanagement

Order entry

Materialsmanagement

Shipping

09/11/2004



PDM system

CRM solution

Supply Chain Mgmt

Enterprise Resource Planning system

Legacy application

Point-to-point integration

eCommerce

09/11/2004



Pitfalls in point-to-point integration

Complexity

Custom Interfaces

Manual re-keying

Stove piped processes

Data migration & consistency

09/11/2004



Enterprise Systems IntegrationWebster’s New Collegiate Dictionary:

in·te·grate \’int-e-,grat\ vb [L integratus, pp. ofintegrare, fr. integr., integer] vt 1 : to form into a whole 2 a : to unite with something else 2 b : to incorporate in a larger unit

Both “top-down” and “bottom-up” meanings are listed!

Design and manage an enterprise wide “compound”information system that support the operations of the enterprise

Integrate enterprise systems to each other to perform tasks jointly

Q: Which integrated systems do you encounter in you daily life?

09/11/2004



EAI– “Hub and Spoke” architectureEnterprise Resource Planning system

EAI services

Supply Chain Mgmt

eCommerce

PDM system

CRM solution

Siebel

WWW

I2eMatrix

SAP R/3

Pakki

Legacy application

09/11/2004



EAI services include

Platform, protocol management..

Asynchronous,Synchronous messaging support..

Security services, encryption,non-repudiation..etc

Routing services, publish/subscribe..

Directory services..

Metadata management & repository services..

Event management, topology & synchronization..

Data mapping & transformation services..

09/11/2004



B2Bi picture

Application

Application

Application

ApplicationEAI

Company A

B2BMiddleware

Company B

Company C

Appli-cation

Appli-cation

Appli-cation

Appli-cation

Appli-cation

09/11/2004



Summary

There are stable enterprise systems on which to implement e-businesses

enterprise resource planning

product design/PDM

supply chain management

point of sales

manufacturing

However, applying them is not easy

BPR, organizational issues, complexity,...

And, they must be integrated

EAI, B2B integration

09/11/2004



Commercials

T-86.141 Enterprise Systems Integration 3 cr autumn

T-86.165 Seminar on Product Data Technology 2-6 cr P V

spring

T-86.161 Special Topics in Information Technology for

Production II 2-6 cr P V spring / T-86.301 Project course

on ICT Enabled Commerce 4 cr P V spring

http://www.soberit.hut.fi/T-86/T-86.141/





